A business law blog published by the business lawyers at AttorneyBritt - Gary L. Britt, CPA, J.D. Commentary and information regarding the laws and regulations applicable to individuals, corporations, partnerships, and limited liability companies (LLCs); as they relate to the myriad of business transactions, contracts, and agreements every business owner, shareholder, member, physician, and/or health care provider must consider.

Monday, June 15, 2015

Summer Day Camps And The Child And Dependent Care Tax Credit

Day
camps are common during the summer months. Many parents pay for them
for their children while they work or look for work. If this applies to
you, your costs may qualify for a federal tax credit that can lower your
taxes.

Here are the top ten tips to know about the Child and Dependent
Care Credit:

Care for Qualifying Persons.
Your expenses must be for the care of one or more qualifying persons.
Your dependent child or children under age 13 usually qualify. For more
about this rule see Publication 503, Child and Dependent Care Expenses.

Work-related Expenses.
Your expenses for care must be work-related. This means that you must
pay for the care so you can work or look for work. This rule also
applies to your spouse if you file a joint return. Your spouse meets
this rule during any month they are a full-time student. They also meet
it if they’re physically or mentally incapable of self-care.

Earned Income Required.
You must have earned income, such as from wages, salaries and tips. It
also includes net earnings from self-employment. Your spouse must also
have earned income if you file jointly. Your spouse is treated as having
earned income for any month that they are a full-time student or
incapable of self-care. This rule also applies to you if you file a
joint return. Refer to Publication 503 for more details.

Joint Return if Married.
Generally, married couples must file a joint return. You can still take
the credit, however, if you are legally separated or living apart from
your spouse.

Type of Care. You may qualify for it whether you pay for care at home, at a daycare facility or at a day camp.

Credit Amount. The credit is worth between 20 and 35 percent of your allowable expenses. The percentage depends on the amount of your income.

Expense Limits.
The total expense that you can use in a year is limited. The limit is
$3,000 for one qualifying person or $6,000 for two or more.

Certain Care Does Not Qualify. You may not include the cost of certain types of care for the tax credit, including:

Overnight camps or summer school tutoring costs.

Care provided by your spouse or your child who is under age 19 at the end of the year.

Care given by a person you can claim as your dependent.

Keep Records and Receipts.
Keep all your receipts and records for when you file your tax return
next year. You will need the name, address and taxpayer identification
number of the care provider. You must report this information when you
claim the credit on Form 2441, Child and Dependent Care Expenses.

Dependent Care Benefits. Special rules apply if you get dependent care benefits from your employer. See Publication 503 for more on this topic.

Remember
that this credit is not just a summer tax benefit. You may be able to
claim it for qualifying care that you pay for at any time during the
year.

About Me

AttorneyBritt - Gary L. Britt, CPA, J.D. is both a lawyer and Certified Public Accountant (CPA). I have over 30
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